IF WE BUILD IT

Peru 2017 | CONSTRUCTION & REAL ESTATE | INTERVIEW

TBY talks to Francisco Osores, President of the Peruvian Chamber of Construction (CAPECO), on the sector's recent performance, its work to facilitate more investment, and its upcoming plans.

Francisco Osores

How did the real estate and construction sector perform in Peru in 2015?

Construction went down by 6% in 2015, whereas in other years it has generally gone up by more than Peruvian GDP. The reason is mainly due to some structural problems in the sector. Some infrastructure and housing projects were delayed due to regional and municipality elections at the end of 2014. The old system for issuing permits was slow and no longer met current demands. There were bottlenecks with the approval process. The commission that checked the blueprints for housing projects only worked for two hours a week, and the number of housing units on offer went down significantly in 2015. In 2014, we had roughly 29,000 units on offer in Lima, and this dropped to 23,000 units in 2015. That brought the market down. Another problem was due to the government change between 2014 and 2015 and delays with zoning in urban center around the country. This stopped the development of many new projects. In 2015, the housing and construction market fell mostly because of internal problems rather than low demand; demand is strong. There were 40,000 units available nationwide and the demand is for 1.8 million units. Over the next 20 years, we will need 2 million additional housing units, which creates great potential. We need to construct between 140,000 and 150,000 units of housing per year for the next 20 years to make up for the current deficit. There is currently at least a USD60 billion infrastructure gap in the construction sector. If we continued at the same slow pace of 2015, the gap would be USD160 billion over the next 20 years. New governments will to have to tackle this gap to provide the roads, ports, airports, schools, and hospitals that Peru needs. The infrastructure market is, therefore, strong, and we seek investment opportunities. The government has opened up the area of infrastructure development to PPPs and concessions, which is great. This allows investors to make long-term investments in this sector.

What action is CAPECO taking to facilitate new investment and increase connections between possible investors and firms in the sector?

CAPECO is a non-profit association for companies such as suppliers; infrastructure developers, constructors, and general contractors; and housing real estate developers. CAPECO's administrative functions fall under three areas. The first is to work with local, regional, and national governments to influence their policies and agendas that impact the sector in the short, medium, or long term. We work to make a clear and dynamic agenda that allows for communication and the revitalization of the development of the sector. Education is the second function of CAPECO's central administration. Due to the rapid growth of the economy the demand for specialized workers for certain parts of the economy has increased exponentially. We, therefore, have an institute that provides training, mostly in the construction industry. We have committed to extending our education network into different regions to try to fill those skill gaps. The third area we work in is various chamber activities, such as business networking, road shows, national and international missions, and trade shows.

What are CAPECO's goals for 2016 and the medium term?

We need to finalize our permanent planning committees with the government in 2016. We are also working on our Better Cities Project. Under this project, we provide technical support to the Arequipa regional government and to the Cusco municipal government to work on various city expansion plans. The aim is to have more ordered urban development and predictability in terms of the next steps. We are primarily dedicated to working with the new government on the infrastructure plan as well as housing planning, which we call city planning, for Peru's 235 main cities over the next five years. We have a long and ambitious agenda of things to do, including the expansion of our education system to other cities in the country.